Does Bombs Away require franchisees to resell items not uniquely identified with the franchisor?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away FDD, under certain conditions, Bombs Away franchisees may be required to resell items to the franchisor that are not uniquely identified with Bombs Away. Specifically, a provision in the franchise agreement addresses this scenario.
This requirement is subject to certain limitations, particularly in Minnesota. Minnesota law prohibits franchise agreements that do not fairly compensate franchisees for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings at the time of expiration if the franchisor does not renew the franchise. However, this compensation requirement does not extend to personalized materials with no value to Bombs Away or items not reasonably required for the franchise business.
Furthermore, this protection applies only if the franchise term is less than 5 years and the franchisee is restricted from operating a similar business under a different brand in the same area after the franchise expires, or if the franchisee receives less than 6 months' notice of non-renewal. This suggests that Bombs Away franchisees in other states may be required to resell items not uniquely identified with Bombs Away without compensation if these conditions are not met.
Prospective Bombs Away franchisees should carefully review the franchise agreement and any state-specific addenda to understand their rights and obligations regarding the resale of inventory and other items upon termination or non-renewal of the franchise. It is important to understand the conditions under which Bombs Away may require the franchisee to resell items and whether fair compensation will be provided.